Posts con el tag ‘Innovation’

Making predictions is always difficult and risky. If we are already finding it hard to see eye to eye on our past and present, imagine the trouble we have with the future – blank canvas that it is.

Despite the fact that predictions are risky (and that we don’t often get them right) they do help us to analyse the trends that could unfold, or will simply give us a lot to talk about over the coming year.

In fact, there have been few times when we have seen so many areas in which changes are so imminent and have so much capacity to affect the lives of so many people so quickly, as we’re seeing now. And many of those changes have been brewing over the last year.

Who would have imagined only a year ago that we would be talking about self-driving cars, not as fiction but reality? Who would have dreamed that someone would seriously suggest introducing basic income? Who would have thought that the number of smartphones on the planet would reach 74% of the population? And what about the start of physical money disappearing, and black money with it? Who would have even dreamed that developments such as the Hyperloop would be planning to relegate most high speed train networks to the archives of history?

Doesn’t it feel like an exciting year has just begun?

I have attempted to put those trends that I think hold the most interest, the most promise and have the greatest potential to change the world, into 7 groups. As you will see, this is not about predicting the future but talking about it, and imagining the potential that could lie behind each of those seven opportunities.

1.- Cars transform cities once again

The car has largely defined cities as we know them. If you take a look at the space we dedicate to them, you’ll see that it is huge. It is a space that is in definite contrast to their use, which is not more than 5% of the time on average; space for parking, space in the street, space in the layout of the city and space in our aspirations and dreams.

All of that is changing, and changing very fast. One of the triggers has likely been the certainty that, pretty soon, cars will be self-driven and electric. These two vectors come hand in hand with the cultural transformation in iconic cities such as New York which has seen the car shift from being something aspirational to being simply a utility.

A self-driving car does not need to be parked outside – you call it and it comes to you; it enables changes to be made to the traffic rules we have today which are designed for people, who are slow and can sometimes be more concerned with flouting them than following them. A self-driving car can also drive at any time without a break (for road transportation at night, night-time home delivery, etc.).

An electric car sends the variable cost of transportation into another dimension. Charging the battery of an electric car costs between $1 and $4 depending on the country, and $0 with solar panels; without paying the sun tax, of course! For that money, we get 160-300 km of mileage. It is another dimension in which the only costs of transporting people and goods are paying for the vehicle and extremely low variable costs.

All of this means that the design of cities is more focused on shared cars and public transport along the lines of Uber, with a self-driving, electric future in mind. In the future, we are going to need just a fraction of the space that we now dedicate to transport and it will be cleaner, more efficient and a whole lot cheaper.

The change in mentality is also important. New generations do not dream about having a car; travelling by bike, scooter or electric bike is cool. A city that walks, that exists as a meeting point, results in a city that is designed for moving around by car.

Cars – or the change in our perception of cars – are dominating city design once again, only this time in the opposite way to how it was done in the 19th century.

2. Sharing economy: less sharing, more economy and more Gigs

The sharing economy emerged with the promise of sharing, but is fast becoming about mobilising idle resources through platforms that allow them to be marketed with very little effort. One such example is airbnb, which allows easy marketing of a room or apartment without having to promote it personally. Then there is Uber, along with many others.

This element of available recourses being able to enter the market with very little effort has allowed a high number of anonymous people to penetrate areas that were previously closed off behind significant barriers to entry. This is the case in the example of apartments and taxis. It has forced the level of competition higher, to the point where driving a taxi or having a hotel room is no longer enough. You have to do it well, provide a quality service and innovate if you want to stand out.

This has had a remarkable effect on the market. This month, Yellow Cab – the biggest taxi company in San Francisco – has declared bankruptcy, and the number of great value-for-money apartments on offer has grown enormously all over the world. The market is more of a market, and less dominated by a few companies that determine the offer and conditions. On another hand, these platforms have become global businesses in an economy dominated by ‘the winner takes all’, from which it is almost impossible to escape.

These platforms have also managed to organise their work in a way that is independent and dispersed, and have had a decisive impact on what we understand a business to be. A business is now divvied up and many tasks that used to be done internally now sit outside of it: this is the Gig economy; the on-demand economy.

This invasion of the platforms, in their two forms, is changing everything: our perception of work, the structure of cities, etc.; and we need new legislation that responds to those changes.

Any attempt to stem the tide and turn the clock back or cage in these platforms is destined to fail completely or turn cities or nations that try to ignore the course of history into North Korea. We need to confront it and design regulation for this market that combines social aspiration with the opportunities presented by new technology.

3. Participation: more than a word

Just as technology has torn down barriers to market entry for many people, it has also enabled mass participation and consultation.

We still work with political systems that were thought up 300 years ago, while the rest of our lives and relationships have changed drastically. It is clearly only a matter of time before citizens demand that these systems be updated, and that is going to happen sooner or later, whether we like it or not.

Everywhere, we are seeing a multitude of experiments in which participation, the use of technology as sentiment analysis, or binding or non-binding consultations play a leading role. These experiments will undoubtedly crystallise into practices that will not only be accepted, but become basic rights, whereby unilateral decisions made by governments will be less accepted, less justifiable and seen as less democratic.

4. Invisible money

This year, Denmark is intending to eliminate physical money, while transactions with Alipay in China in 2015 represented $519 billion, with 350 million users. With Alipay, you pay electronically or show a QR code generated on your smartphone, which lasts for one minute in the supermarket. New players such as Apple, Google or Transferwise are either redefining payment methods, or trying to.

However, the opportunities do not end there. Blockchain – the bitcoin protocol – ensures complete traceability and secure confirmation without the need for a mediator. How long until we see a version of Blockchain introduced for electronic money? Probably not very long.

Denmark will be successful, and other countries such as Sweden or even Germany intend to follow in its footsteps shortly; but in China, Alipay is what young people use and ApplePay is great.

5. The ability to store energy changes everything!

Tesla has presented its domestic batteries, and all over the world we are witnessing a fierce race to reach the Holy Grail – a battery with a greater capacity, shorter charge time, lower cost and longer duration.

In a world where the cost of solar panels is decreasing fast as their performance improves, a good battery would be the catalyst for energy at zero variable cost; and that is a whole new world.

The efforts made by Tesla on graphene batteries or on substituting lithium for higher performance compounds could enable us to make current batteries 2 or 3 times better. This would give us batteries that charge in around 10 minutes, allow us to drive over 600 km at half the cost, and that are lighter weight and longer lasting. This is the frontier that would really launch the electric car and distributed energy production in many places; this is a frontier we could cross in 2016.

6. Internet and invisible infrastructures

Not long ago, we were happy with 20MB, and 300MB or 1G was a dream. Well, that dream has become reality.

This is the year that this dream goes further; the year we see the internet become something like electricity, where important areas are connected at speeds approaching 1G.

This is also the year of the Internet of Things (IoT).

In any case, the most important thing is most likely not connectivity, but what we can do with it. Nowadays, that means the creation of infrastructures that connect people, create markets and make it possible for them to operate virtually.

The creation of markets is what makes platforms like Uber and airbandb possible and gives them their value. However, digital platforms need not be restricted to markets; their potential goes beyond that, allowing real invisible infrastructures to be created that could allow citizens to participate in public life, speed up and start projects, or accelerate business proposals.

These invisible infrastructures contribute greater value than real ones, if that be possible, because they do more than enable and create capacity; they are directly linked to action. It is not about creating empty buildings, but rather bringing together people who want to do things and helping them to do it.

7. Basic income and Evidence Based policy

For many years, policy has been justified based on ideas, beliefs and values. A more just society required further reaching redistributed policies; a freer society, the abolition and simplification of regulations.

However, as society becomes more complex, it is difficult to be sure that a certain policy will lead us to the desired objective. On the contrary, more often than we would like we find ourselves confronting the bitter truth that policies that have been fought for tirelessly lead to ends that are completely opposite to those intended.

A good example of that is the issue of basic income. Its advocates declare that it will help make workers more competitive by allowing them not to have to accept any offer and to be more selective. On the other hand, its critics argue that many part-time employees who make us more efficient will be lost and we will be less competitive. In reality, nobody knows for sure what effect it will have.

As some countries will be taking a more serious look at introducing basic income in 2016, we will soon know more.

This situation demonstrates that our method of designing policy doesn’t really work, and works badly. When contexts were less complex and the causes more evident, it wasn’t so challenging. However, with the current levels of complexity, endlessly discussing aspects that nobody actually knows and attributing causalities to policies whose impact is little known is not very productive.

Luckily, less dogmatic methods that rely more on experimentation and data obtained from measureable results are gradually gaining ground. It is this, rather than the doctrine or vision of governments, that determines how good certain political measures are. Tools such as Big Data and data analytics will play an essential part in this transformation.
play an essential part in this transformation.

Today Europe is faced with the challenge of adapting to new technologies and innovation processes which would make cities more inclusive, competitive, efficient and, most importantly, more livable. The SUNSHINE project organizes an open, European-level challenge that this year is about promoting innovation in energy efficiency through two tracks:

The Energy efficiency initiative of the year track recognizes the contributions of public administrations or planning bodies to the transformation of our cities and neighborhoods towards greater energy sustainability. Governmental initiatives, submissions from cities and regions, as well as projects of urban and regional planners are welcome.

The Innovation in smart urban services aims at promoting these technologies in terms of best practices and innovative products in all stages of development which contribute to achieving the concept of smart cities. The project leaders are looking for solutions coming from industry, SMEs, researchers and Universities which have the potential of drivers for change, in European and local markets as well as the research landscape.

Sunshine- “Smart UrbaN ServIces for Higher eNergy Efficiency” is a research project at the Institute for Innovation and Knowledge Management supported by the Competitiveness and Innovation Framework Programme (CIP) 2007 – 2013. SUNSHINE delivers innovative digital services, interoperable with existing geographic web-service infrastructures, supporting improved energy efficiency at the urban and building level. Specifically, SUNSHINE delivers a smart service platform accessible from both a web-based client and an App for smartphones and tablets.

The project is now halfway through its last year of implementation, and its solutions are being tested in eight pilots that are currently running at full capacity, testing and assessing the three SUNSHINE scenarios: Energy mapping and pre-certification, Building energy awareness and Remote control of lighting networks. Their success in achieving a valuable socio-economic impact, as well as in developing a short and long-term exploitation plan are currently being analyzed.

Remember the days when Nokia and Motorola owned the phone market? They are not so distant, only a few years ago. Yet how many of you have a Moto or a Nokia now? Let me guess: none!

If you are sceptical about the power of innovation for shaping markets and destroying fortunes, these two examples are a reminder of how fast things can go. But they tell us more; they describe a change in the way we compete.

Not so long ago, firms competed on price. In a way all societies started here, taking advantage of low wages, natural resources or any other factor that might provide a sustainable advantage, difficult to replicate. As we know now, these advantages were far from sustainable. Low wage countries, if successful, became richer, raising wages. Shifts in extraction technology, such as fracking, made extraction advantages less relevant, and so on. So, let’s forget about sustainable, ok?

Competing on innovation needs early adopters, experimentation and fast market validation of proposals.

Productivity replaced low costs as the main form of competition. Knowledge became the new buzzword. Nowadays however, knowledge is everywhere and while some sectors strive to maintain their knowledge advantage, engineers in India or China have become just as competent as their rivals in Europe or America, and with them the productivity level of these different societies is levelling out.

We are no longer competing on productivity. Some of the biggest, most thriving companies such as Apple, Google, Airbnb, Tesla, Facebook, GE, Amazon and Apdo still compete on productivity of course, but they earn their huge surplus and tremendous market share from innovation. They compete not on making similar things more efficiently but on transforming the world with completely new products and services.

This Copernican change in the way we compete has huge implications.

Competing on cost doesn’t need much. Competing on productivity needs good engineers and labs, it is the territory of incremental improvement. Competing on innovation needs early adopters, experimentation and fast market validation of proposals.

Cities are becoming the medium for this experimentation to take place. New proposals for smart cities cannot be validated in labs; they need real-life spaces and the interaction with citizens for validation.

Barcelona, for example, put in place quite some years ago the idea of ‘urban labs’: a simple idea with a difficult implementation. Put simply, firms were invited to submit their proposals for experimentation and, if selected, they were allowed to use the urban space for testing, experimentation and as a showcase for their new technologies. At the same time, Trentino, Manchester and Helsinki worked on similar concepts from the point of view of Living Labs and the facilitation of citizens’ involvement in innovation.

Sounds great, doesn’t it? It certainly is, but implementation has been complicated because you have to navigate a maze of permits, economic incentives and costs. Moreover, user experimentation is at the firms’ expense and many firms are not – to put it politely – up to speed in this area. Therefore the project ends up being badly done or not done at all, greatly diminishing the whole purpose and value of the urban lab experiment.

After some years’ experience of urban labs, their flaws are well known. Pilots such as the Barcelona example are great, but continuous programmes are better. Spaces should be prominent if they have to function as showcases. Global awareness is a must and user-driven development and co-creation should be facilitated by the programme. Finally, many firms, particularly the small ones, the most innovative ones, need support and resources to implement their programmes, either from the city, crowdsourcing or regional government. If not, probably most of the really innovative ideas won’t even be attempted.

However, in spite of all the problems, urban labs have been a success and it has been proven that they are the right way to go. We need cities that once again want to become places where ideas are born and developed.

Nevertheless, for that to happen we need change. Not only in the companies themselves but also a complete change of mindset in the cities and their policymakers. They need to embrace, facilitate and foster open innovation – innovation that is not coming from the city but to the city. They need to be proud of helping this process to thrive, to be facilitators in this new transformation of cities into entrepreneurial spaces.

This change of mentality will go far beyond the businesses, empowering the entrepreneurial spirit of citizens and changing the government’s role to that of an ecosystem orchestrator instead of trying to solve everything with the provision of resources and services.

Words delivered by Jonathan Wareham, Dean of Faculty & Research, to the 2015 MBA Graduating Class of ESADE Business School

I was recently at a seminar with the Dean of Medicine of Warwick University. He controversially claimed that medical universities can produce qualified physicians in just three years. This was obviously provocative on many levels, including the well-known tendency of medical schools to limit access to the profession to keep salaries high. His argument was basically that, in the old days, medical students were expected to command a full body of medical knowledge. Today, this is simply impossible given the explosion of scientific knowledge in recent decades. Medical students must learn some basics, but they must also have the ability to discover and navigate new information, assimilate it, and use it with a great deal of critical reflection. This argument really made me think.

We have a similar challenge in management education; that is, what and how do we teach in business schools? There are some standard answers that we have all heard before: knowledge, skills, capacities, personal ability, leadership, changing world views, people building, entrepreneur building, or manager building. At ESADE, we emphasise concepts/modifiers such as: creative; innovative; entrepreneurial; ethical; social justice; create value for society; build prosperity for others less fortunate.

Of course, we must ask: Do we do this well? How can we do better?

One concern I have is that the simplification of many managerial ideas/fashions leaves our candidates poorly equipped to do what people in positions of responsibility are asked to do; that is, make difficult decisions that have consequences for others (positive, negative, or otherwise) with very limited information, in a short time period, and with plenty of uncertainty and ambiguity. For this you need a strong sense of self and the ability to critically reflect on the often simplified narratives the world provides you. This is similar in some ways to what my colleague in medicine was describing for his students.

Now, as a professor in a school of management, I have some license to satirise our profession. Consider how overly simplistic and value-laden management discourses can be:

Creativity is good. Control is bad.

Innovation is good. Administration and bureaucracy are bad.

Incremental innovation is OK. But disruptive innovation is much better.

‘Ethical’ labels make you kind. But if you have no explicit ‘ethical’ label, you are probably greedy.

Social entrepreneurship is good. All for-profit is bad.

Design is cool. Manufacturing is mundane and boring.

Local/micro industries are idyllic. Mass production is dehumanising and environmentally destructive.

Social innovation is warm, fuzzy and likable. Finance is the source of all evil.

Sustainability – whatever that means, is clearly good. All petroleum and chemical companies, as well as gene modifiers, are on the dark side.

And so on…I am being sarcastic and perhaps unfair, but I do so to make a point.

Why is this problematic? Let me give you an example to think about.

In our PhD programme, we spend a great deal of time teaching about theory; what a theory is, and what it is not.

Consider what happens when I release the pen I am holding. It falls to the ground. The ancient Greek explanation for this is that it wants to move towards the earth, or more specifically, the small object (the pen) wants to move towards the large object (the Earth). Is this statement right or wrong? It is difficult to evaluate. We can say that is has a high degree of predictive validity – the outcome is always correctly predicted. Of course, we have no evidence to suggest that the objects can ‘want’ or have any form of agency. Hence, the question about whether the ancient explanation is right or wrong is somehow meaningless, perhaps silly, or, more importantly, not particularly useful.

Of course, we all know that Newton invented a language that has the same predicative validity, and tells us much more about the interactions of mass – and so we use that language for many things. But there are many aspects of gravity that Newtonian mechanics do not tell us. It is very useful to predict certain outcomes for a particular range of phenomenon, but not useful for others. To paraphrase the statistician George Box, as a theory, it is neither right nor wrong, just useful for some purposes. It really does not make sense to ask questions regarding truthfulness or correctness. Those concepts are meaningless for theories.

In the same manner, I would argue that the simple narratives we use in management education are very useful for a particular range of phenomena, but unfortunately, these narratives will often have little value when you engage in the real world. And acknowledging this – and helping you deal with it – is one area that where we can do better as an academic institution. Let me give you two examples:

Über

Is it good or is it bad? Is it legal? Is it ethical? Is it disruptive innovation? Is it socially valuable, or is it reckless capitalism? This all depends on who you ask, and when.

What is good about Über? – it provides new jobs, a new service model, service to underserved areas, and a great customer experience.

What is bad? – it threatens jobs and can undermine an otherwise well-regulated and operational taxi industry.

It is interesting to consider the typical pattern with which Über enters a market. Über begins operations, and after gaining a certain critical mass, it begins attracting criticism from local taxi operators and regulators. Pressure develops on politicians to stop Über. From here, legal orders arrive ordering a shut-down. At this point, Über often belligerently ignores the legal mandates, despite fines and legal consequences (including the jailing of executives) in an effort to buy more time to build customer support. And once it achieves a certain level of popularity among users (while operating illegally), the popularity is directed back at the politicians, and political pressure is applied to modify the legal frameworks and make Über legitimate.

Typically, Über goes through this cycle in about three years. So in this short time frame, it starts as a parasitical, unethical, illegal, pirate business and evolves into something that is legal, legitimate, and embraced in many cities, and, of course, finally legitimised by the regulators.

Should Über be permitted in Barcelona? I honestly do not know. I thought Über was great in San Francisco, but also appreciate the efforts that have been made to construct the well-functioning Barcelona taxi service (offering a service that is reasonably priced and high quality). I feel good knowing that the drivers obtain a good income. It is also one of the few industries that pays taxes in a fairly transparent manner. In Spain, this needs to be appreciated.

So the question remains as to whether Über is good or bad, ethical, or unethical, socially beneficial disruptive innovation, or reckless cowboy capitalism. I feel that the simplified narratives somehow leave us poorly equipped to answer these questions. Alternatively, perhaps they are just questions that have no utility; questions that cannot provide any meaningful or useful response.

Private Empire

A famous book that is often read by executives is entitled “The Rise and Fall of the Roman Empire.” I have never read it. A book I have read is called “Private Empire – ExxonMobil and American Power.” The author is Steve Coll. He previously served as the editor-in-chief at The Washington Post, and is now Dean of the Columbia University Graduate School of Journalism. His thesis is that oil companies are some of the largest, non-democratically elected concentrations of power on the planet, yet we really know little about them or what they do. Hence, more transparency is needed in the industry. He is not a friend of big oil, but his investigative journalism is serious, professional, and balanced. Please read this book! It is one of the best books on management. Exxon – like many oil companies, does many things that are morally despicable, clearly and unambiguously unethical. But it also does many things that are good, or even socially beneficial. After the infamous oil spill in Alaska, it drove some of the most demanding safety practices in the industry. This positively influenced the entire sector and, hence, was beneficial for the whole planet. But in many cases, if not the vast majority of the managerial predicaments described in the book, the behaviour of Exxon is neither good nor bad, neither ethical nor unethical. It is difficult to evaluate, and one is left with the sense that, if I were in this position (say CEO of Exxon), even with the benefit of history, I am not sure I could have made ‘better’ choices. Most of the predicaments described are just very, very peculiar and difficult.

As an example, consider doing business in the developing world. Do you deal with a corrupt government with a miserable record on human rights? Or do you deal with rebel factions that are equally brutal and do not allow girls to read? Is their presence in the nation beneficial to the locals? Are they creating good jobs and building skills, schools and hospitals? Or are they stealing natural resources for the benefit of their own wealthy shareholders in the west? And if they chose to exit that market, which less scrupulous company from another part of the world would take its place?

These types of questions are very hard to answer. But as a manager – you will need to find your own answers to these kinds of questions. That is my point. As a management school, our job is to prepare you for this kind of reality where there are no easy answers, no simplified narratives to help you with choices, important choices that will have consequences for others; confusing realities that elude being framed by simple and naive dogma.

It is also important to recognise that you do not need to be an Exxon, Nike, or Walmart to draw criticism. Some of the most socially conscious organisations, charities, religious bodies, or well-intentioned public health organisations have drawn a great deal of criticism for various reasons. At some point, when you reach a certain size, your actions will have consequences for others – positive, negative, or some not yet thought of descriptor. This is a result of doing things – particularly if you try to change things. There is a good chance that someone, for very legitimate reasons, will not agree with what you are doing – despite being as ‘ethical’ or well-intentioned as you so aspire.

I fully encourage you to be ethical, socially innovative, and entrepreneurial as you create economic, social, and cultural prosperity for others. I fully believe that business can play a strong role here. But be aware of simplified truths, naïve dogma, and of trying to frame complicated issues with simplified questions that really cannot give you any useful answers. For better or worse, ambiguity, uncertainty, and limited insight into cause-and-effect will define much of your existence when you assume a position of responsibility. And this is a tough existence for most normal human beings. I certainly find it challenging, and I think most do.

I strongly believe that making you more conscious and comfortable with this reality is one of the most important things we can do in managerial education. I know we have aspired to do this. I also know that we can do it more effectively – so I would naturally invite your input, as ESADE graduates, on how we can improve.

Enough of my psychobabble. My closing advice: continue to learn, and continue to think critically as you develop your own answers, your own narratives to make sense of this complicated world. Please remember you are part of the ESADE family, so please stay connected with us and continue to share your lives with us at ESADE and each other in the Alumni network. We are very proud of you – congratulations.

Welcome

Welcome to the ESADE Institute for Innovation and Knowledge Management Blog.
We are a cross-disciplinary team dedicated to understanding the creation of knowledge and innovation.
Through this blog we’ll share information and thoughts in order to better understand the new innovation systems.
You are welcome to participate in it!

Jonathan Wareham,
Head of Institute for Innovation and Knowledge Management